The impact of health information technology on hospital productivity

Authors


  • Support was provided by a grant from The Robert Wood Johnson Foundation's Changes in Health Care Financing, and Organization (grant no. 64845) and we gratefully acknowledge the Health Information Management Systems Society (HIMSS) for the use of their data. Finally, we thank Amil Petrin, Bryan Dowd, and our reviewers for their helpful comments.

Abstract

Health information technology (IT) has been championed as a tool that can transform health care delivery. We estimate the parameters of a value-added hospital production function correcting for endogenous input choices to assess the private returns hospitals earn from health IT. Despite high marginal products, the total benefits from expanded IT adoption are modest. Over the span of our data, health IT inputs increased by more than 210% and contributed about 6% to the increase in value-added. Not-for-profits invested more heavily and differently in IT. Finally, we find no compelling evidence of labor complementarities or network externalities from competitors' IT investment.

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